What To Expect From Wheaton Precious Metals’ Q1 Results

by Trefis Team
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Wheaton Precious Metals
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Wheaton Precious Metals (NYSE: WPM) will release its first-quarter results on May 10th after the market close and conduct a conference call with analysts the following day. Average consensus market estimates expect the company to report an EPS (Non-GAAP) of $0.16, 14% higher year-on-year (y-o-y) and revenue is expected to reside at $209.3 million, 6% higher y-o-y. Higher gold prices in the first quarter are expected to boost the company’s top line, partly offset by lower silver output.

Wheaton Precious Metals in January announced the restructuring of its streaming agreement at San Dimas mines wherein it terminated its existing San Dimas purchase agreement and entered into a new purchase agreement with First Majestic with respect to San Dimas. The new agreement will reduce the company’s silver output share from San Dimas and increase its access to the mine’s gold output. The company expects its 2018 silver output to be 22.5 million ounces, roughly 21% lower than 2017 largely as a consequence of the above-mentioned restructuring.  Gold output, on the other hand, is expected to be rangebound near its 2017 level, with the new contribution by San Dimas being offset by lower grades at Salobo and Minto, and a reduced share from its 777 mines. However, the new San Dimas agreement will be effective post-April 1, 2018 and hence the company’s first-quarter silver sales volume is not expected to be significantly impacted by the recent change.

The company’s top line, on the other hand, is expected to be positively impacted by the recent surge in gold prices. Gold has been gaining strength due to the ongoing trade tension between the U.S. and China and the geopolitical tensions in the Middle East. Gold is considered as a safe-haven asset for investment and generally gains strength with increasing global uncertainty. A weaker dollar has provided some further buying opportunity for the yellow metal and aided its price. Gold prices averaged at around $1,329/ounce in the first quarter of 2018, ~9% higher y-o-y. The company’s increasing exposure to gold in an environment of higher gold prices is expected to remain beneficial for the company in the near term.

Our key expectations for the company’s 2018 results are highlighted in our interactive dashboard. You can make changes to our assumptions and arrive at your own fair price estimate for the company by using our interactive platform.

 

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